Correlation Between V One and Korea Electric

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Can any of the company-specific risk be diversified away by investing in both V One and Korea Electric at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining V One and Korea Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between V One Tech Co and Korea Electric Power, you can compare the effects of market volatilities on V One and Korea Electric and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in V One with a short position of Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of V One and Korea Electric.

Diversification Opportunities for V One and Korea Electric

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between 251630 and Korea is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding V One Tech Co and Korea Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electric Power and V One is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on V One Tech Co are associated (or correlated) with Korea Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electric Power has no effect on the direction of V One i.e., V One and Korea Electric go up and down completely randomly.

Pair Corralation between V One and Korea Electric

Assuming the 90 days trading horizon V One Tech Co is expected to generate 1.64 times more return on investment than Korea Electric. However, V One is 1.64 times more volatile than Korea Electric Power. It trades about 0.11 of its potential returns per unit of risk. Korea Electric Power is currently generating about -0.13 per unit of risk. If you would invest  366,000  in V One Tech Co on September 15, 2024 and sell it today you would earn a total of  32,500  from holding V One Tech Co or generate 8.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

V One Tech Co  vs.  Korea Electric Power

 Performance 
       Timeline  
V One Tech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days V One Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Korea Electric Power 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Korea Electric Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Korea Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

V One and Korea Electric Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with V One and Korea Electric

The main advantage of trading using opposite V One and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V One position performs unexpectedly, Korea Electric can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Korea Electric will offset losses from the drop in Korea Electric's long position.
The idea behind V One Tech Co and Korea Electric Power pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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